Cities in the Twin Cities metro and rural Minnesota have signed on to a bill that would change the way local government aid is distributed.

Proponents say the proposal simplifies the funding formula, making it more stable for cities and easier for people to understand. It also makes sure more money goes to cities that have a greater need for property tax relief. Older, inner-ring suburbs would benefit the most. These cities are fully developed and can’t easily generate new revenue in the way that growing suburbs do.

“I hope the Legislature will recognize that having all the different city groups agree is a very significant achievement,” said Bruce Ahlgren, mayor of Cloquet and president of the Coalition of Greater Minnesota Cities. “Everyone had to come in with realistic expectations. While no one walked away with everything they wanted, everyone is pleased that we have a framework for a stable and predictable program into the future.”

The bill was introduced Monday, March 18, in the House with both DFL and Republican sponsors from across the state. It is based on Gov. Mark Dayton’s proposal to spend $506 million annually on local government aid, an $80 million increase.

Rep. Jim Davnie, DFL-Minneapolis, said the legislation gets rid of a lot of the complexity and density in the old formula. It focuses on what drives costs for cities across Minnesota — costs that differ. A city of 8,000 in greater Minnesota is a good-sized city for that region and tends to offer more services than a Twin Cities suburb of 8,000.

“What drives property taxes in different size cities in different parts of the state? The measures we’re using reflect that and respect that,” Davnie said. “It makes sure that wherever you live in Minnesota, your city is able to provide you essential services at a reasonable cost.”

No cities would see a decrease in local government aid under the new formula. But some could see significant gains.

Maplewood, Roseville and Oakdale didn’t receive local government aid in 2013, but they would get an estimated $530,000, $225,000 and $100,000, respectively, from the state in 2014.

Local government aid isn’t without its critics. Detractors have argued it’s an inefficient way to deliver property tax relief. Just half of Minnesotans live in cities that receive it; those in affluent suburbs and townships do not.

But Rep. Paul Torkelson, R-Hanska, said local government aid is supposed to help cities that typically would have a difficult time providing essential services to residents at a reasonable cost. He represents 22 cities, and almost all rely on local government aid.

“At first blush, it’s much better than what the governor originally proposed,” Torkelson said. “It really does make it more fair and equitable.”

Small cities aren’t the only ones that rely on local government aid. St. Paul and Minneapolis receive the bulk of the funding — 25 percent. St. Paul got about $50.3 million in 2013 and can anticipate an additional $10.1 million in 2014 if the proposal passes.

That goes a long way, considering the cuts St. Paul received in state aid in the past decade, said Joe Campbell, spokesman for Mayor Chris Coleman. In 2002, state aid covered roughly 42 percent of the city’s general fund budget and the tax levy made up about 25 percent. The numbers have effectively flipped.

St. Paul spends the vast majority of its state aid on cops, firefighters and the city attorney’s office, Campbell said.

And the city backs the revised formula and Dayton’s proposed $80 million increase.

“Everyone involved in the process backed this as a fair and equitable way to distribute local government aid,” Campbell said. “When cities are strong, our state is strong.”

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